Lack of must-have items could add to retailer's woes

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Mario Quintero, 25, goes to pay for his Playstation 3 after waiting in line for three days at a Best Buy store in Los Angeles, California, in 2006. The lack of a must-have item like this one could be another blow for retailers this holiday season.

Add another item to the long list of woes already facing retailers: the dearth of must-have items expected to fly off the shelves this holiday season.

As the traditional holiday shopping season kicks off, there are no stand-out toys or electronic gadgets that are expected to spark the frenzy seen in years past, when late-night lines snaked through the streets and parents came to blows trying to get that much-coveted gift for their kids.

“The lack of a hot toy is one of the reasons we’re going to have one of the worst Christmases in 30 years,” said C. Britt Beemer, founder of America’s Research Group and co-author of “The Customer Rules.” “There’s no reason for parents to kill themselves to go out and buy that hot item.”

Of course, it’s far from the only reason analysts expect an especially tough holiday season, as retailers battle the gloom of a deep downturn in the economy and financial markets. The International Council of Shopping Centers is predicting that sales in the crucial November-December season will rise a paltry 1.7 percent over last year.

A season without a must-have item is just adding insult to injury.

“The big challenge this year is to get people in the stores, because there isn’t really that one must-have product that gets people all excited,” said Stephen Baker, a consumer electronics analyst with NPD Group.

With toys, Beemer said the buzz of a must-have item can boost overall sales for several reasons. For one thing, parents seeking a hard-to-find gift may just go shopping more because they are hunting for that item, perhaps picking up more items along the way. For another, parents who didn’t get that item sometimes end up spending more on other gifts for their children to compensate.

In years past, holiday shopping manias have been sparked by toys including Tickle Me Elmo and Cabbage Patch Kids, as well as by video game consoles including the Xbox and PlayStation 3. Retailers have sometimes been able to spark a run on the shelves by offering extreme bargains on items such as DVD players, elevating them to the same kind of “must-have" status.

Others downplay the importance of a must-have item. While such a cultural phenomenon can generate buzz, longtime toy analyst Chris Byrne said the most important thing for retailers is that they are able to accurately predict what will sell, so they aren’t left with either empty shelves or a glut of merchandise at the end of the season.

Byrne, who is content director for timetoplaymag.com, is expecting overall toy sales to be flat this year. But he still thinks certain toys will be in high demand and may even become scarce. Those include the Bakugan game products and Elmo Live, the latest iteration of the interactive Sesame Street character doll.

“There isn’t one must-have toy that everybody’s talking about that’s leading the news, but there are ones that have people already out there trying to scour the stores,” he said.

Byrne notes that the Bakugan action figure and game series may prove especially popular because there are plenty of low-priced components for budget-conscious consumers.

But some of the other toys making many “hot” lists this year will be too costly to reach “must-have” status this year. Elmo Live is selling for around $60, while last year’s Elmo toy retailed for just $40. Biscuit My Lovin’ Pup, an interactive dog toy, sells for about $150.

Many of this year's highly promoted items are just new versions of toys or gadgets people are already familiar with, such as the Elmo doll, the iPhone or game consoles such as the Wii.

Still, Baker, the consumer electronics analyst, thinks there can be advantages to a retail environment without a must-have item. A single hot item "helps a very specific piece of the market, but it’s not always a rising tide lifting all boats,” he said. “You get a very lopsided opportunity.”

But this year, that may be cold comfort. Even before the financial crisis hit in September, Baker said a weak holiday season already was expected for the technology industry. That’s because many people already have a house full of gadgets — such as music players and digital cameras — and don’t see the newest offerings as cheap enough, or enough of an improvement, to justify an upgrade.

“The growth in technology is starting to slow down,” he said.

Still, Baker said there may be some pockets of strength this holiday season. He’s expecting some shoppers to focus on purchases that can be shared by the whole family, such as large-screen televisions, notebook computers and video game consoles.

Gary Rudman, president of GTR Consulting, which tracks the habits of teens and young adults, is expecting more people to give as gifts the type of “necessity” gadgets that they might, in a stronger economy, have bought without needing a special occasion. That means a GPS system, updated laptop computer or replacement cell phone might end up under the tree this year.

He expects teens to ask for new technology gadgets this holiday season, but he isn’t seeing a trend toward one particular piece of hardware.

“There’s definitely a desire to still get those pieces of technology that they always covet — the sort of iPhones of the world — (but) there doesn’t seem to be that one ‘it’ item this year,” Rudman said.

Economics aside, Byrne said there may be other advantages to not having a must-have item dominating news coverage as we head toward the holidays, especially given the more pressing issues on many peoples’ minds.

“It’s kind of a relief that we’re talking about, ‘Is Hillary going to be secretary of state?’ rather than, ‘Where can I get an Elmo?’” he quipped last week.